Lumps Of Coal
In true
holiday fashion, market players looked eagerly for a gift from the
hands of an old master yesterday. But the rarely jolly Greenspan played a poor
Santa: his refusal to cut interest rates, even while noting that Fed policy will
ease, left the market like a big lump of coal…cold and dark. My reticence to
give readers an analysis of the most leveraged put verticals may have left you
without any treats in this move. I mentioned on Dec. 6, Dec. 8 and again on Dec.
12 that put verticals would be the attractive strategy…"once we got
back-to-back up days to enter"…those back-to-backs never came, but you
know the rest. So…mea culpa.
In the meantime, you may have taken
the hint independently and done all right…at least we said that trading every
day was not a must. We’ll get in sync with you here, if we can.
Options players sprang out of bed
today to face the continuation of yesterday’s tech tumble (seven days in a row
now) and are seeing volatility skyrocket on moderate volume, but precipitous
price declines. Put sellers were out in force in pre-market queuing, especially
in the tech and healthcare sectors. Their action foretold this first-hour bounce
we just witnessed.
Pre-open order
volume was moderate today. In the overall market, call sellers and buyers were
even at 1:1, while put buyers led sellers 3:2. The top five pre-bell order
volume leaders today are as follows: CSCO, AOL, MSFT, JNPR and CIEN. JNPR call
buyers outpaced sellers 7:3, while put buyers led sellers 7:3. CIEN call buyers
led sellers 9:1. AOL call sellers lead buyers 3:1. JDSU, ORCL and YHOO call
sellers outgun buyers 2:1, while put buyers are out in force in each of these
names.
First-hour volume
was moderate today, up 10% on the 30-day moving average. Overall, call buyers
led sellers almost 2:1. Put sellers led buyers 5:4. the top five first-hour
order volume leaders today are as follows: CSCO, JNPR, INTC, MSFT and CIEN. JNPR
put buyers outpaced sellers 2:1, while call buyers led sellers 4:1. ORCL put
sellers led buyers 7:2, while call buyers led sellers 2:1. AOL put buyers trail
sellers 4:5, while call buyers outpace sellers 2:1.
Bottom pickers seem to be prevalent in
the first hour with the call buying picking up dramatically. Some of the
networking names that are on year-plus lows have attracted this interest. NT,
PCMS, EXTR and JNPR now have attractive call verticals that will return well
with modest retracement.